Gold plunged 3.15 per cent in the Mumbai bullion market on Tuesday after crude oil fell to a three-year low and the dollar strengthened against major global currencies.
Uncertainty over global economies remained a matter of concern, which forced funds to book profits overseas, denting the yellow metal’s claim as a hedge against inflation.
Standard and pure gold declined Rs 410 each to close the day at Rs 12,600 per 10 gm and Rs 12,660 per 10 gm, respectively, here.
Before recovering a little on bargain hunting, the precious metal slipped to Rs 12,560 per 10 gm but the weakening rupee against dollar held the metal firm despite falling prices in the global market.
Meanwhile, gold recovered in London to hit $780 an ounce in early afternoon trade, in the absence of other profitable asset classes.
Sentiment remained strong as the yellow metal, which offered 12-13 per cent returns over the last five years, was proved as the alternative investment amid the economic crisis. Traders believe the metal would restore its ground before the end of London trading today.
According to Bhargav Vaidya, trading activities, which had halted in the wake of the terrorist attacks last Wednesday, resumed on Monday evening. Today, business was normal in Zaveri Bazar, the famous precious metals market in Mumbai where traders transact about one tonne of yellow metal everyday.
On the Multi Commodity Exchange, too, gold for near-month delivery dropped by 1.34 per cent to Rs 12,517 per 10 gm while April contract lost 1.32 per cent at Rs 12,552 per 10 gm.
